Yep. I think WilliamG is exactly right... it only mutes the music and you would still use battery.
Try this:
Go to the home menu and click on the playing button "7". You will see the song you are playing and you will see the counter ticking the time away. Press dead center on the Joystick and the counter will stop clicking. Hold down the Menu button and you will see that the now playing has switched to the pause icon. That will actually stop the playback.
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